Product Led Growth: Being Product-Led in a Highly Specialized Industry

Episode Transcription

Christian Beck:

Welcome to the final episode of our product-led growth series. Now normally you will hear both me and Anna kicking off these episodes, but today you'll just be hearing me because at the time of recording this, Anna was busy welcoming her daughter, her newborn daughter into the world. So that goes to prove that the only way you can really get out of recording this show is to have a baby. But it's pretty awesome news and be looking forward to having Anna back with us, but very excited for her and her new addition to the family.

Christian Beck:

But on the product-led growth front, we need to wrap up the series. So this is our final episode featuring Ryan Chan, the CEO and founder of UpKeep. If you've been following the show for a while, you heard Ryan Chan not too long ago on an episode of Better Product Weekly during all the remote, coronavirus work we were all crazy doing. Ryan's back again to tell a unique story because his company has been product led, despite being in a highly specialized workforce and one that is historically non-tech oriented. It's actually something pretty unique in product-led growth. Often when we hear people talk about product-led growth, they talk about using examples focused primarily on the B to B tech space. You think of Slack or even before that you might think of Dropbox. These are always the go to examples that people have. But we don't often hear about PLG with something as specific as say, facility maintenance. So I'm really excited to have Ryan Chan talk about that today because I think there's a lot of innovation coming in a lot of specialized industries and he's going to give us a little bit of a roadmap there.

Christian Beck:

So before we get into it I'm going to give you a little more background on UpKeep. So their mission is to empower maintenance workers to be more productive through the adoption of cloud-based technology. Instead of letting others' notions around product-led growth drive his decision, Ryan debunks the myths surrounding it, sharing why it's been the right strategy for UpKeep. So really excited for him to share his story today. Take a listen and hear for yourself.

Ryan Chan:

So the first point that I heard was centered around you can't do product-led growth unless you're in a horizontal industry. I've heard that many many times before. When you look at UpKeep, at the face of it we, again, build software for maintenance teams. You don't think that this is a horizontal market, thus you might conclude that product-led growth might not work for us either because it's not horizontal and there's not a large enough total addressable market. I categorize us, and you've probably never heard this before, you might laugh at me, but I categorize UpKeep as a horizontal vertical market. UpKeep is a product... Again, we build products for the maintenance teams. That's a very vertical niche. But the reason why we're horizontal, maintenance is done in every single building in every single industry in every single country in the world. So when you look at it from that perspective you realize actually, maintenance is kind of like a horizontal market, but we always sell into a vertical department.

Ryan Chan:

So I think that's one of the reasons why product-led growth has worked for us. It's this massive industry where 3.5 million US workers work in some sort of maintenance repair job, but you often don't hear about them. You often don't hear about these roles because they're often done in the background. We always hear is that maintenance only gets called when something breaks, but we forget about the people that have helped support, sustain, and maintain our facilities and our world because everything is going smoothly until it's not.

Ryan Chan:

For us, I think we have a semi-unique approach to product-led growth in the market. We hyper-focused on the technician, and there are a lot of technicians out there, the 3.5 million. And we built this horizontal product that at the end of the day was hyper-focused on driving value to improve their days and ultimately enable them to go home earlier. And instead of writing things down on a piece of paper and pencil, they have UpKeep, this app. The free version geared toward technician is hyper-focused on almost like this note taking app with maintenance terminology and maintenance related tasks to it. That has done tremendously for us because it's very different than all of our competitors out there in the world where they hyper-focus on building for the managers, they hyper-focus on building for the VPs of operations, but they forgot about the end user and that's really where I think, the core of our product-led growth has enabled us to grow to the point where we are today.

Christian Beck:

In your market, where you first entered the market, what was your background on how people traditionally bought software?

Ryan Chan:

It might help to give a little bit of background behind myself. So I went to Cal Berkeley. I was a chemical engineer. My first job coming out of Cal Berkeley was working in a manufacturing plant. My title there was a Process Engineer. I worked directly with the maintenance and reliability teams at this manufacturing plant, and more specifically, I was part of the team that was responsible for choosing, picking, implementing a maintenance management software so that we could improve our manufacturing process. We wound up searching high and low and we chose the best one that we could. Everything was desktop based. When we think about a maintenance team, a technician focused team that's repairing work orders. If you think about the technician repairing our HVAC machines, they're never sitting at a desk. The best software that we could find was 100% desktop focused. And their version of a mobile app was hey, open up your browser on your phone and go to this URL.

Ryan Chan:

So full circle, the traditional way of selling and building software in our space was hyper-focused on the manager. The manager is 1 person our of a group of 10 people who sit at a desk. The manager is the on who's looking at reports, but there are nine others who spend 95% of their day out in the field. And that's kind of like the traditional model of the software that we're building. And when we came into the market and said we're going to build a hyper-focused product geared towards the nine technicians out in the field, and when we do that, that's going to give better data insights, reports, and insight to the manager, it kind of flipped the model a little bit. And I'm sure you've seen that with many other businesses as well that have done product-led growth very very successful.

Christian Beck:

Yeah, I think the hallmark in a SAS product like this is Slack. I think a lot of the product people I talk to that want to do this, "Oh we wanted to grow like Slack." And what they mean by that is I want it to be easy for an end user to go grab and then it's the sort of ask for forgiveness is easier than asking for permission with the IT person. Once you grow past a certain point you go to them and say "I really need to purchase this." At least in Slack's case I think end users are searching for these things. But in your case, are technicians actually going and seeking out solutions for them in the field?

Ryan Chan:

That's a good question. I'm going to say partially yes. I have to temper this because we are not like Slack obviously. People aren't just on a daily basis looking for collaboration tools, but on the other side of that when we think about the technician and what they have to deal with, the existing solution they have today in place. The existing solution is I get assigned a job, I go out into the field, I take all of my notes down on a piece of paper and pencil, and I come back to the office and I retype all of my notes back in. So that's the current state of affair. What I'm trying to do is paint the picture of why I think we've grown so much and why I think that there has been this mass of people that are actively searching for something like UpKeep. Because now when they realize hey, I've got to write everything down on a piece of paper and pencil, why not search the app store for a to-do list, kind of like a note taking application, because that's easier than writing it down on a piece of paper and then typing it all back in.

Ryan Chan:

So I think that was really the impetus of why we grew so much in the beginning and all the way up to this date today, is because people are actively searching because the existing state of affairs is writing it down on a piece of paper.

Christian Beck:

That kind of leads me to where my next question is. In these models a lot of times the buyer needs different things, and you mentioned the manager needs reports and things like that, the technician is 95% in the field. So how did you message the UpKeep product to those different audiences, or did you message it differently?

Ryan Chan:

We did. We profiled our customers and what we found was a lot of people who again, search on the app store. They're out in the field. They're searching on the app store for kind of like a checklist, to-do list application and if we can build a better tool that's branded towards maintenance and the work that they're actually doing, they come to UpKeep and they find us and they download it. Now, the second part of this is who's the actual buyer in our process? And we realize, that's actually not the technician. It's closer to the manager or the manager's manager. And what we realize is again, we've got the manager, they aren't really out in the field. They're not interested in using the mobile applications as much as the desktop applications. So we also profiled the two different modes of sign up too.

Ryan Chan:

So if you go to our website you get the manager's focus. You get the manager's buying journey. If you go to the app store you get the technician focused journey. It really shows up when you look at all of our data, you look at the conversion funnels, and you realize wow, it makes a lot of sense.

Christian Beck:

If I'm getting this right, it seems like you've messaged the product differently based on the channel that you're finding. Because you've been able to say that based on the channel, that's a great indicator of the buyer versus the user.

Ryan Chan:

Exactly. And I think more people don't do that enough. They have like, hey this is the journey. This is your journey and it's kind of a catchall for everything. You go through the journey whether you're the technician, let's call it the facility manager, or let's call it the operations manager. You go through the journey all the same way. For us, we basically said let's call it 90% of the time we're right. 10% of the time we get it wrong and the manager is actually downloading the mobile app, but that's okay because we want to focus our efforts on creating the best experience for the large majority of people. And I think that's a big part of product-led growth. We always talk about ease of use, making it extremely easy to sign up and go through hyper-tailored experiences as you go through that onboarding journey.

Anna Eaglin:

The one aspect of product-led growth is that it really monetizes the most valuable use cases. A lot of times you see in [inaudible 00:11:37] PLG plays where as soon as you need to invite someone else, that's where you hit a pay tier. Has UpKeep done things like that where at some point you're going to hit a wall and now it's time to upgrade or what's your strategy around conversion?

Ryan Chan:

You're right. A lot of companies do do this. Once you add this many people then you hit that tier. Obviously we do have a paid product. We actually have close to 3000 businesses that have chosen that paid product as well. For us, we said what's really core to us, we don't want to limit the number of people that this can spread to. I think that's another big decision point when you're thinking about product-led growth. Do you do it and do you limit the free product based on the number of seats? For us, we said no. Our free product, you can add as many people as you want. You can add 2 people, you can add 1 person, you could add 120 people in your organization or more. The core premise behind it was we think about our journey and why someone would want to use the free product. It's ultimately because they don't have the buying authority, the budget, the resources, but they do need to collaborate with the rest of their team.

Ryan Chan:

Where we have put pay walls. We think about it again, from the manager's perspective. We profiled them into two very different user stories. The manager cares most about data, insights, reports, insights in how to run and change their business. So a lot of the upgrade features are based on product usage that's geared towards the facility manager. Our entire free offering is the collaborative aspect of maintenance, hyper-focused on the technician.

Christian Beck:

That sounds like a pretty big risk to take on your part, to let it spread freely amongst technicians and then bank on the fact that the key value is insights for managers to pay for. Have you felt that risk or do you feel confident in that decision so far?

Ryan Chan:

It was a big risk actually. And I'll kind of walk through our journey as well. I started the company about three and a half years ago, just myself. I was building UpKeep on the nights and weekends and I had a 100% free product. There was no way to pay and upgrade. I was just doing it for fun. I got an opportunity to go into YC and one of the first things they said is "Hey Ryan, free forever with no paid features is not really a sustainable business model." I was like okay. That kind of makes sense I think.

Ryan Chan:

So at that point during YC when it was just me, we wound up switching to a completely free product for everything to you're limited to the number of work orders that you can create. It's usage focused. And what we realized a couple years, well it was a year later, we wound up continuing to grow and obviously this free offering was really important to us. But at that point, let's call it two years ago, we made a very conscious decision to say we believe in product-led growth. We believe that we can make product-led growth work in this industry because we believe there is a large, total addressable market that we know technicians are hurting and need a better solution for, but they may not have the budget for it today.

Ryan Chan:

So two years ago we made the switch. We said we're not going to limit the number of work orders that you can create on our free plan. We're going to open it up to everyone that wants to use UpKeep. We're going to open up the floodgates and say you can use our free product for free forever if that's what you want. And there was a big risk associated to that. But it was really really important to me. We did our research. We did our mapping of the industry. But then at some point you kind of had to say this is what I believe in and I'm willing to and I want to take this risk. That's what we did two years ago and I would say it's paid off. We've gotten the opportunity to continue growing. The team's about 100 people now. And continuing to grow and thrive.

Christian Beck:

So it sounds like you've got enough evidence at this point that says you will see conversion at some point. Over those past two years as you've done that, have you found that you've had to sort of refine the points that you're looking for in the data to figure out when they convert? Do you look at the data with that sort of granularity to figure out at what point do people typically buy or what profiles are more likely to buy, things like that?

Ryan Chan:

So the answer is yes, but I'll also preface it with the journey is long. I think our business is in it for the long haul. We don't view this as one month, two month conversion funnel. For us, we really look at it almost at the community lens where we know if we do right for our customers and the community, that they're going to come back to us at some point. So to answer the question more directly, we look at our conversion funnel. We look at how long and how likely they are to come back to us. We look at knobs that we can turn, trigger points that we can... Messages that we can showcase to get them to convert at a higher rate. We've done all of that. We hyper-analyzed our Google analytics. But a big piece of this has to come from what do I believe is right and what do I believe is going to help us build the critical mass that will separate us from everyone else in the industry.

Ryan Chan:

That's another big risk but I don't think people really, really recognize that product-led growth is not a short term play. product-led growth takes a long time. You can't just blast your team with a bunch of sales people and hit the phones really hard. product-led growth is all about building a critical mass and that takes time.

Christian Beck:

I think that's a great reality check that PLG's not a short term play. And really, I think we hear that with sales cycles for more enterprises, not short term either. So I'm curious from your perspective, as you build the community with the free product for several years, how do you keep the product afloat? How do you keep the business afloat? What sort of things are you doing as that slow, methodical process takes place?

Ryan Chan:

I would say that while it's slow, we've been fortunate that we started this journey three and a half, four years ago. So this has been a longterm play that has kind of been in the mix for a very long time. From the very, very early stages of UpKeep we've always had some aspect of free. Maybe for us, we're kind of, at least for me and for the business, we are at this inflection point where a lot of the dividends are being paid today for us and that's what's enabled us to grow so much. But I think the question you're asking for me is if I'm trying to build a product-led growth company right now and I have to make this investment today knowing that it's not going to pay off for another one, two years. How do we keep the product afloat? And I think my response really there, you have to bifurcate your thought process into two different facets.

Ryan Chan:

The most important thing is focusing on the today. If your business can't stay afloat today and tomorrow and next month and next quarter, that's your number one focus. And as you ensure stability over, let's call it the next week, next month, next quarter, that's when you can start pushing that longterm view out more. So I wouldn't say sacrifice the today for the next year or the two years. You have to slowly, gradually build yourself and the confidence you have in the business in order for you to get to that point where you can say I'm going to pay today. I'm going to take the debt today because I know it's going to pay off next year.

Christian Beck:

From my perspective and the way PLG can get talked about, or at least maybe interpreted, is it's kind of like this overarching, one size fits all thing that the product must lead growth and that's it, and then sales and marketing kind of take a back seat. But I'm curious if you find that that's true or if there are still sales teams involved? You have a team of 100 now. But even in those early days when you are keeping your eye on the bottom line and making sure that you have stable growth, do you still have more traditional sales in outbound or marketing channels that are also working for you as well?

Ryan Chan:

Yeah. So I think there's a few questions in there. I'll kind of tackle the easiest ones, the hardest ones. So the first one is, is there a marketing team. 100%. Marketing is core, core, core to getting people's eyeballs on the product. So that's... When we talk about product-led growth, it doesn't mean that there's no marketing. Marketing's actually extremely core to product-led growth. The next question was centered around is there a sales team and what does the sales team do in product-led growth. For us, we didn't end up hiring our first sales person until roughly about, call in 20, 30 people. And yes, we do have a sales team.

Ryan Chan:

The next question's probably like what do they do in product-led growth. For us, we've positioned our sales team to really focus on driving value. We don't have an outbound sales team. So everyone that our sales team touches and talks to is someone who signs up for the product. We don't want to disturb that product journey and a product experience that they're going through. So we didn't want to blast them with sales calls saying how can we sell this product to you. The conversations that our product team that we've been hyper-focused on to maintain that really good experience with us has been centered around how can we help you. How can UpKeep drive more value to you and your business? So that's the first part of yes, we do have a sales team. They're focused on driving value to our customers. You'd probably say every single sales team does that, or at least wants to. What's different about UpKeep?

Ryan Chan:

I think our core focus again, is segmenting our sales team into a few different segments. You've got our team that's hyper-focused on driving value to servicing our customers, but what we also realize with the freemium product is that there are so many different types of people that come into our funnel that need different things. It can be a small business. It could be a large enterprise. A big part of what our sales team does, because we get so many product signups every single day, our sales team is basically combing through the list of signups and trying to point our customers and users in the right direction, whether that's the self-service product or whether that's going through a more traditional enterprise sales process.

Christian Beck:

That makes a lot of sense. I know it was a really basic question, but I think sometimes it gets lost and it's like well, sales is involved, but how does that look. It sounds like it's like a sales assist model really is sort of facilitating that journey rather than being the instigator of it.

Anna Eaglin:

I think you make it sound deceptively easy honestly. I think it's great to hear how you've done it in kind of a non-traditional type market. I do think it's inspiring. So we really appreciate your time and so glad you could join us today.

Christian Beck:

Yeah. Thank you very much. Thank you for joining us for the product-led growth series. It's swept across almost this entire calendar year, given the delay that we had. But it's amazing when we started this, I think sometimes in January or February, but we've had a lot of amazing guests on the show. If you haven't listened to all of them or if this is your first one and you want to hear more of them, I highly recommend you visit betterproduct.community and dive into the content there. We have a lot of stuff on product-led growth. We have a lot of links to the past episodes that we've had that cover the topic as well. So for this particular episode, I'm speaking on behalf of Anna Eaglin, the new mom and myself, Christian Beck. This has been Better Product.